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Mega ICBC
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Taiwanese Banking Industry & Market Overview
In 2015, domestic banks reported a record high of pretax profits exceeding NT$360 billion, breaking the record of over
NT$300 billion kept in 2014. Non-performing loan ratio of domestic banks stood at 0.23% at the year end, dropped from
the previous year’s 0.25%, while coverage ratio rose to 555.43% from 516.38% at the same period. This suggested that
the assets quality of the domestic banks stayed in a more satisfactory level.
Domestic banks’ total loans increased to NT$22.6 trillion or 3.05% in 2015, slightly lower than 4.56% in 2014. By sectors,
loans to government-owned businesses shrunk 3.40% compared to 2014, while loans to private sector grew 2.42% up to
NT$9.6 trillion, as the private sector yielded better return. Among consumer loans, housing loans continued to grow by
NT$265.3 billion, up 4.52% to NT$6.1 trillion at the end of 2015. However, the housing loans and construction loan
dropped by 0.98% to NT$1.6 trillion, due to negative outlook for real estate market and forthcoming tax rate raising over
property.
Credit cards in circulation increased by 3.02% in 2015, while card loans dropped by 4.34%. Since Financial Supervisory
Committee led to cut the ceiling rate, the scale of card loans could be shrunk further.
I.
Positive Factors
Strong capital buffer and sound asset quality of Taiwanese
banks bolster its’ capability to response to financial
volatility.
The regulatory authorities have deregulated the banking
business to a considerable scale, which could broaden
scopes of financial service and products, and increase
income resources.
Taiwanese banks, which have built up strong franchise
and dense service networks in Southeast Asia, will benefit
from the burgeoning financing need in the region, thus
overseas income growth is forecasted to accelerate.
Following Fed’s interest raising decision, the increasing
USD interest rate spread will improve the profitability of
the banks.
II.
Negative
Factors
Domestic financial market’s competition remains fierce,
which constraints loan spread broadening, and limited
profit growth.
While real estate market is gradually cooling down, there
is little room for related loan business to expand, along
with rising credit risk.
Given domestics banks’ high exposure toward China,
diminished Chinese growth momentum and tougher
operating environment could curb overseas earning
growth, and erode asset quality.
The GDP growth rate of Taiwan in 2016 is forecasted at a
relative low 1.5% which will affect the retail consumption
as well as profit margin of businesses.
III.
Winning Strategies
Maintaining extra capital conservation buffer to broaden
global presence so as to seize the business opportunities
in better-yielded international syndicated loans and
offshore banking business.
Employing in wealth management product innovation to
suffice investment needs and boost fee revenue.
Fertilizing cyber security human capital through on-job
transition training in response to the forthcoming business
requirement.
Intensifying risk management and crisis management
framework.
IV.
Mega ICBC’s Niche
Mega ICBC is irreplaceable in terms of foreign
remittances, and it enjoys competitive edge in foreign
exchange business. For example, the Bank’s New York
Branch is the only Taiwanese bank that simultaneously
participates in CHIPS, Fedwire, and ACH as a member
bank.
Mega ICBC owns expansive global presence, and
international banking expertise, enhancing the bank’s
diversification and profitability.
Mega ICBC maintains the highest foreign deposit balance
among domestic banks ever since.